ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation
A country's government sells its majority shareholding in a state-owned railway company to private investors. Which term describes this action?
This is privatisation, which means transferring ownership of a business from the public sector to private investors. It is the opposite of nationalisation. Deregulation only relaxes rules and outsourcing only contracts out activities, so neither involves a change of ownership of the company.
- ANationalisation
- BPrivatisationCorrect
- CDeregulation
- DOutsourcing
Explanation
Privatisation is the transfer of ownership of an asset or business from the public sector to the private sector. Nationalisation is the reverse. Deregulation removes rules but does not change ownership, and outsourcing contracts out activities while ownership remains with the organisation.
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